Reading the headlines this January will fill any business owner with dread.
It's all doom and gloom! The papers are not mincing their words. Consumer confidence is still shaky in the face of price increases and increasing unemployment. Predictions show that cash is going to get even tighter this year than last.
It is now more important than ever that small business owners find alternatives to cash to enable them attract talent - top talent that can turn their businesses around. Research has shown that non-financial incentives are more effective at motivating people with satisfactory salaries than cash incentives. Cash incentives are great but they only generate short bursts of activity and are generally unsustainable or even damaging in the long term. The financial sector, which relies heavily on cash incentives, illustrates the damaging effects of pure cash incentives. The world is yet to recover from their actions.
When cash was freely available, business owners could wave the cash and hope to attract some great people. Now, people are less trusting of businesses and although unemployment is high, it is still relatively tough to build a great committed team.
A McKinsey Survey conducted in 2009 highlighted three non-cash motivators that staff rated rather highly. These were: praise, attention and recognition from leaders and the chance to lead projects (responsibility). Although the respondents to this survey worked for large corporates, I believe the results are relevant to small businesses because people are the same - irrespective of the size of business they work for. In my previous life working for the global professional services firm Deloitte, I know these three points influenced my career decisions and are a must for the small business owner who wants to compete with the bigger guys and ladies for top talent.
Small business owners need to step-up and become leaders who motivate their staff beyond the paycheck. I will go as far as to say that the ability to motivate people is the greatest asset any business owner can have. Motivated and hardworking people can turn most businesses around and are a necessary ingredient for businesses that want to survive and reposition themselves for growth this year. Business owners need their staff to buy into their vision and believe their promise of a better future if they sit tight and work hard.
Steve Jobs, the maverick visionary entrepreneur behind the Apple brand, perfectly illustrates this whilst trying to win Mr. Sculley, the former Pepsi-Cola chief executive, to join Apple's executive team. Steve Jobs asked Mr Sculley: "Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?"
Steve Jobs got Mr Sculley to buy into his vision without using purely monetary incentives. The former Pepsi-Cola chief executive was so impressed with Steve Jobs' offer of changing the world that he walked away from Pepsi. Although this partnership didn't end well for Steve Jobs, it proves that top talent doesn't necessarily always go to the highest bidder. Few people can naturally pull this off (Steve Jobs was a genius) but leadership skills can be learnt. I believe it is an investment worth making as a small business owner if you want your business to survive the recession.
2012 is the time to head back to basics. Treat your staff well and they will reward you by being truly committed and dedicated employees who go above and beyond their roles or job descriptions.
So what do the leadership gurus say about being a great leader?
According to Stephen Covey, there are four things that make a great leader. Great leaders inspire trust, clarify purpose, align systems (basically your walk should match your talk, don't be two faced!) and unleash talent. Stephen Covey states that when the first three points are aligned, then you empower people and their talents are unleashed to support the business.
Great leadership skills are vital for the business owner who wants to motivate their staff beyond the paycheck this year. I had a client implement these same ideas and was able to reduce her overheads by a third without losing any of her team. Engage regularly with your team; show them that you value them. Build trust. Let them feel like you are on their side.
Reward loyalty and your staff will reward you with even more loyalty. Don't exacerbate your business' problems by alienating your team. You share a common goal with your staff, they want to keep their jobs and you want to keep your business open.